Eagle Marketing Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 3265/DEL/2013

• Counselvise Citation: 326520114 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: PRATYUSH MIGLANI S
• Section: 40A(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO. .. .3265/DEL/2013 3265/DEL/2013 3265/DEL/2013 3265/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008- -- -09 0909 09 M/S EAGLE MARKETING PRIVATE M/S EAGLE MARKETING PRIVATE M/S EAGLE MARKETING PRIVATE M/S EAGLE MARKETING PRIVATE LIMITED, LIMITED, LIMITED, LIMITED, D DD D- -- -298, KASHYAP HOUSE, 298, KASHYAP HOUSE, 298, KASHYAP HOUSE, 298, KASHYAP HOUSE, SARVODAYA ENCLAVE, SARVODAYA ENCLAVE, SARVODAYA ENCLAVE, SARVODAYA ENCLAVE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 017. 110 017. 110 017. 110 017. PAN : AAACE0113D. PAN : AAACE0113D. PAN : AAACE0113D. PAN : AAACE0113D. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -11(1), 11(1), 11(1), 11(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRITESH KAPUR, SHRI SHAURAK KASHYAP AND SHRI PRATYUSH MIGLANI, ADVOCATES. RESPONDENT BY : MS. PARWINDER KAUR, SR.DR. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A)-XIII, NEW DELHI DATED 21 ST MARCH, 2013 FOR THE AY 2008- 09. 2. THE GROUNDS OF APPEAL FURNISHED BY THE ASSESSEE WERE VERY ARGUMENTATIVE RUNNING IN ALMOST THIRTY PAGES. THER EFORE, AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE A SSESSEE WAS DIRECTED TO SUBMIT THE CONCISE GROUNDS OF APPEAL. HE SUBMIT TED THAT THE GROUNDS OF APPEAL HAVE ALREADY BEEN SUMMARIZED AT T HE END OF THE GROUNDS OF APPEAL UNDER THE TITLE RELIEF CLAIMED I N THIS APPEAL. HE, THEREFORE, SUBMITTED THAT THE RELIEF CLAIMED IN THE APPEAL SHOULD BE TREATED AS CONCISE GROUNDS OF APPEAL. THE SAME ARE REPRODUCED BELOW:- ITA-3265/DEL/2013 2 9. RELIEF CLAIMED IN THIS APPEAL IN VIEW OF THE ABOVE, THE APPELLANT PRAYS THAT THIS HONBLE TRIBUNAL MAY BE PLEASED TO : A) ALLOW THE PRESENT APPEAL; B) QUASH AND SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT; C) DELETE THE ADDITION AMOUNTING TO RS.2,30,396/- MADE UNDER SECTION 40A(3) OF THE ACT AS PER THE IMPUGNED ORDER OF THE LEARNED CIT; D) DELETE THE ADDITION AMOUNTING TO RSS.11,20,554/- MADE UNDER SECTION 40(A)(IA) OF THE ACT AS PER THE IMPUGNED ORDER OF THE LEARNED CIT; E) DELETE THE ADDITION AMOUNTING TO RS.12,75,827/- MADE UNDER SECTION 145(3) OF THE ACT AS PER THE IMPUGNED ORDER OF THE LEARNED CIT; F) DELETE THE ENHANCEMENT OF INCOME OF THE ASSESSEE BY RS.3,42,998/- MADE AS PER THE IMPUGNED ORDER OF THE LEARNED CIT; G) DELETE ALL INTEREST UNDER SECTION 234B AND SECTI ON 234D OF THE ACT LEVIED IN THE IMPUGNED ASSESSMENT ORDER; H) QUASH THE PENALTY PROCEEDINGS U/S 271(1)(C) AGAINST THE APPELLANT; I) RESTRAIN THE RESPONDENT FROM TAKING ANY COERCIVE STEPS WITH RESPECT TO THE DEMAND; AND J) PASS ANY OTHER ORDER(S) AS THIS HONBLE TRIBUNAL MAY DEEM FIT IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 3. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. GROUND NO.(A) & (B) ARE OF GENERAL NATURE AND NEED NO SEPARATE ADJUDICATION. 4. GROUND NO.(E) IS FOR REJECTION OF BOOKS OF ACCOU NT AND A RESULTANT ADDITION BY APPLICATION OF GROSS PROFIT RATE. 5. FROM A PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER HAS NOTED THAT THERE ARE SEVERAL DEFECTS WITH REGARD TO RECORDING OF BILLS OF DYEING CHARGES WHICH HAVE BEEN DETAILED IN ITA-3265/DEL/2013 3 PARAGRAPH 5 OF THE ASSESSMENT ORDER. HE HAS ALSO P OINTED OUT THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT ALONG WITH COMPLETE BILLS, VOUCHERS, FIXED ASSET REGISTER ETC. THE QUA NTITATIVE DETAILS WERE NOT FURNISHED ALONG WITH THE RETURN OF INCOME AND T HE QUANTITATIVE DETAILS FURNISHED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS WERE NOT SIGNED BY THE AUDITOR AND ALSO CONTAINED CERTAI N DISCREPANCIES. ALL THESE DISCREPANCIES NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER COULD NOT BE SATISFACTORILY EXPLAINED BEFORE US. WE, THEREFORE, UPHOLD THE REJECTION OF BOOKS OF ACCOUNT. WE ALSO FIND THAT AFTER REJECTING THE BOOKS OF ACCOUNT, THE ASSESSING OFFIC ER APPLIED THE GROSS PROFIT RATE OF 10% WHICH WAS EVEN LESS THAN THE GRO SS PROFIT RATE APPLIED IN THE PRECEDING YEAR. IN VIEW OF THE ABOV E, WE UPHOLD THE TRADING ADDITION OF `12,75,827/- MADE BY THE ASSESS ING OFFICER AFTER THE REJECTION OF BOOKS OF ACCOUNT. ACCORDINGLY, GR OUND NO.(E) OF THE CONCISE GROUNDS OF APPEAL IS REJECTED. 6. INSOFAR AS GROUND NO.(C) & (D) ARE CONCERNED, IT WAS ARGUED BEFORE US THAT ONCE THE BOOKS OF ACCOUNT ARE REJECT ED AND A GROSS PROFIT RATE IS APPLIED, NO OTHER ADDITION OR DISALL OWANCE WHICH WOULD AFFECT THE TRADING RESULT CAN BE MADE. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE RELIED UPON THE DECISION OF HON'BLE AL LAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSHIDHAR [19 98] 229 ITR 229, WHEREIN THEIR LORDSHIPS HELD AS UNDER:- HELD, AFFIRMING THE DECISION OF THE TRIBUNAL, THAT NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISION S OF SECTION 40A(3) READ WITH RULE 6DD(J) OF THE INCOME- TAX RULES, 1962, AS NO DEDUCTION WAS ALLOWED TO AND CLAIMED BY THE ASSESSEE. WHEN THE GROSS PROFIT RAT E WAS APPLIED, THAT WOULD TAKE CARE OF EVERYTHING AND THERE WAS NO NEED FOR THE ASSESSING OFFICER TO MAKE SCRUTINY OF THE AMOUNT INCURRED ON THE PURCHASES MA DE BY THE ASSESSEE. ITA-3265/DEL/2013 4 7. THAT THE RATIO OF THE ABOVE DECISION OF HON'BLE ALLAHABAD HIGH COURT WOULD BE SQUARELY APPLICABLE TO GROUND NOS.(C ) & (D) OF THE ASSESSEES APPEAL. THE ASSESSING OFFICER HAS REJEC TED THE ASSESSEES BOOKS OF ACCOUNT AND DETERMINED THE PROFIT BY APPLY ING THE GROSS PROFIT RATE WHICH HAS ALSO BEEN UPHELD BY US BY REJECTING GROUND NO.(E) OF THE ASSESSEES APPEAL. ONCE THE GROSS PROFIT RATE IS APPLIED, IT IS DEEMED THAT ALL THE EXPENSES WHICH ARE DEBITED TO T HE TRADING ACCOUNT HAVE BEEN DULY TAKEN CARE OF BECAUSE THE GROSS PROF IT IS THE RESULTANT FIGURE OF THE TRADING ACCOUNT. ONCE THE GROSS PROF IT HAS ALREADY BEEN DETERMINED, NO OTHER ADJUSTMENT IN THE TRADING ACCO UNT CAN BE MADE, OTHERWISE, IT WILL AFFECT THE GROSS PROFIT WHICH HA S ALREADY BEEN DETERMINED. IN VIEW OF THE ABOVE, RESPECTFULLY FOL LOWING THE ABOVE DECISION OF HON'BLE ALLAHABAD HIGH COURT, WE ALLOW GROUND NOS.(C) & (D) OF THE ASSESSEES APPEAL. 8. INSOFAR AS GROUND NO.(F) IS CONCERNED, AT THE TI ME OF HEARING BEFORE US, NO SPECIFIC ARGUMENT WAS ADVANCED BY THE LEARNED COUNSEL AGAINST THE ENHANCEMENT MADE BY THE LEARNED CIT(A). WE FIND THAT THE LEARNED CIT(A) MADE THE ENHANCEMENT ON ACCOUNT OF PEAK NEGATIVE BALANCE IN THE CASH BOOK. SINCE NO SUBMIS SION WAS MADE WITH REGARD TO GROUND NO.(F) OF THE ASSESSEES APPE AL, THE SAME IS REJECTED AS NOT PRESSED. 9. GROUND NO.(G) WHICH IS AGAINST THE CHARGING OF I NTEREST UNDER SECTION 234B & 234D IS STATED TO BE CONSEQUENTIAL. WE AGREE WITH THE LEARNED COUNSEL THAT THE CHARGING OF INTEREST UNDER SECTION 234B & 234D IS CONSEQUENTIAL AND DIRECT THE ASSESSING OFFI CER TO RE-WORK OUT THE INTEREST, IF ANY, AS PER LAW AFTER DETERMINATIO N OF INCOME AS PER OUR ORDER. ITA-3265/DEL/2013 5 10. GROUND NO.(H) WHICH IS AGAINST THE INITIATION O F PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) IS PREMATURE AN D NEEDS NO ADJUDICATION. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2014. SD/- SD/- ( (( ( H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU ) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 30.09.2014 VK. COPY FORWARDED TO: - 1. APPELLANT : M/S EAGLE MARKETING M/S EAGLE MARKETING M/S EAGLE MARKETING M/S EAGLE MARKETING PRIVATE LIMITED, PRIVATE LIMITED, PRIVATE LIMITED, PRIVATE LIMITED, D DD D- -- -298, KASHYAP HOUSE, SARVODAYA ENCLAVE, 298, KASHYAP HOUSE, SARVODAYA ENCLAVE, 298, KASHYAP HOUSE, SARVODAYA ENCLAVE, 298, KASHYAP HOUSE, SARVODAYA ENCLAVE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 017. 110 017. 110 017. 110 017. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -11(1), NEW DELHI. 11(1), NEW DELHI. 11(1), NEW DELHI. 11(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR